Estate Planning Case Study: Protecting the Future for Justin and Maria's Children

Client Background

Meet Justin and Maria, a loving couple with three children, all under the age of 11. They owned a family home with $235,000 in equity, and both had life insurance policies through their respective workplaces. Justin held $500,000 in his 401(k) account, while Maria had $50,000 in hers. Despite their solid retirement savings, they had limited liquid assets. The couple was also anticipating potential inheritances, with Justin potentially receiving between $500,000 and $800,000 from his parents and Maria possibly inheriting $200,000. Their primary goal was clear: to ensure that all their assets would be left to their children, and to make sure that someone was in place to take care of the children and their assets if needed.
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For now, they identified Maria's father and stepmother, both in their late sixties, as the guardians for their children. However, they were hesitant to establish trusts at this stage, and instead opted to draft wills, healthcare proxies, and powers of attorney for both of them. An important factor in advice we gave them was the age of the designated guardians, as they were aware of the potential challenges this could pose in the future.  However, they did not have an agreed younger person in mind, and it was imperative that they get something in place.

Estate Planning Solutions

1. Will Drafting: To address their immediate concerns and ensure the distribution of their assets aligned with their wishes, we drafted comprehensive wills for both Justin and Maria. These wills specified their desire to leave their assets to their children.
   
2. Healthcare Proxies and Powers of Attorney: In addition to wills, we prepared healthcare proxies and powers of attorney for both Justin and Maria. These documents granted them the peace of mind that important decisions would be made according to their preferences in the event of incapacity.
   
3. Guardianship Arrangement: While they had identified Maria's father and stepmother as the guardians for their children, we discussed the potential challenges of selecting older individuals. We advised them to revisit their choice in a few years to ensure it remained suitable for their children's well-being.
   

Conclusion

Justin and Maria's estate planning journey underscored the importance of securing the future for their children. While they chose not to establish trusts at this time, they took essential steps by drafting wills, healthcare proxies, and powers of attorney to ensure their immediate priorities were addressed.

The issue of selecting older guardians for their children served as a valuable lesson. It highlighted the importance of periodically reviewing and updating estate planning documents to adapt to changing circumstances and ensure the best interests of their loved ones.
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Ultimately, Justin and Maria now have a foundational estate plan in place, providing them with peace of mind and clarity about the distribution of their assets. Their decision to revisit their documents in the future reflects their commitment to securing their family's future in the most responsible and thoughtful manner.

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